New Delhi: A day after the combine of TPG Capital and Manipal Hospital Enterprises Ltd agreed to buy the hospital assets of Fortis Healthcare Ltd, the company’s chief executive Bhavdeep Singh said the valuation of the hospital operator’s assets has been affected because of promoter group issues.
The hospital business of Fortis is valued at Rs95-97 per share, or about Rs5,000 crore, and Manipal Hospital at Rs6,000 crore. This is despite the fact that Fortis Healthcare has more than twice the number of hospitals and operational beds than Manipal.
“In the recent past, Fortis has not been doing well while Manipal has been growing in the last 18 months which is why our valuations are low. If you look at Fortis, with some internal issues, primarily driven by promoter group issues, it has been a struggle. We have not been able to focus on the business as we would have liked to because of all these things that are going on and our 12-18 months results were not good. We need to get back to focussing on our business," Singh said in a telephone interview on Wednesday.
The deal announced late on Tuesday evening is valued at Rs15,000 crore and would take about 9-12 months for completion, Singh said.
“We appreciate the strong brand that the Singh brothers have built, but Fortis needs to go its own way. They are technically still the promoters but that might change as well. It is a new step forward for Fortis and it is a step we take without the promoters. The new Fortis has gone forward," Bhavdeep Singh said.
In February, Fortis Healthcare’s promoters had tendered their resignation as directors in order to insulate the company from their ongoing legal troubles and investigations by the Serious Fraud Investigation Office (SFIO) and the Securities and Exchange Board of India (Sebi) for alleged financial irregularities.
The ongoing investigations against the company by the SFIO and Sebi are likely to be over by the time the transaction is complete, which could take anything between three quarters to a year, Singh added.
Clarifying that the deal is not contingent upon the conclusion of ongoing investigations against Singh brothers, the Fortis CEO said that despite overlaps in certain jurisdictions, they do not expect any negative feedback from the competition regulator.
Calling it a big day for Fortis and Manipal Hospital, Singh said, “It is a fantastic step being taken. We had a conference call with the top doctors and leaders in the country and there is an overall enthusiasm that the organisation was expressing with respect of the transaction. Our most important stakeholders are our patients and employees and we are very excited of the new announcement. It’s a big day for Fortis and Manipal," he said.